Reports & Financials Horticulture New Zealand 31st March 2017
President s report Julian Raine Ready for the future At last year s Annual General Meeting (AGM), the Board advised that it had a target of $2 million for retained earnings to ensure that Horticulture New Zealand could sustain a downturn in levies and continue to provide essential services. This would be especially important where the industry was facing a crisis that Horticulture New Zealand had a pivotal role in resolving. The Board is pleased that we have reached this target of $2 million by prudent cost controls in the preceding financial year. The Board therefore, has decided to recommend to the AGM that the Horticulture New Zealand levy be reduced by 0.01% to 0.14%. The Board is of the view that Horticulture New Zealand can maintain its high level of service at this lower funding level. The Board has also engaged our Auditors to assess what our retained earnings should be. If it is completed, that report will be tabled at the AGM. In November 2016, Horticulture New Zealand celebrated the significant milestone of 100 years of representing fruit and vegetable growers. This provided a good opportunity to look ahead to the next 100 years and refresh our strategy as a Board. We are conscious of increasing public engagement on the issues that affect horticulture and a growing interest in food where it comes from, how it is grown and produced, and what impact it has on the wider environment and society. With that in mind, our vision as a Board is: healthy food for all forever. It is a simple concept, but behind it lies a lot of work to ensure rights to grow; access to appropriate land, water and labour; and better market access for exports. As well, we need to focus on the biggest threat to our growing environment, a biosecurity breach that could allow a devastating pest or disease into New Zealand. Behind our vision is continued growth for horticulture and the 5,500 growers we represent. We are now a $5.6bn industry, employing around 60,000 people and making a significant contribution to the New Zealand economy. Our fruit and vegetable export contribution is $3.4bn and growing. To keep that momentum going, we need to ensure our growth is sustainable in the widest sense. Horticulture needs to ensure we continue to do our bit as responsible New Zealanders, employers and producers. The goal is to have a $10 billion industry by 2020. This is ambitious, but as the world switches on to the benefits of both eating more fruit and vegetables and getting them from New Zealand as a trusted source, we remain optimistic that this is achievable. The more people realise the value of horticulture, the better our chances are of attracting the best talent to work in our industry. We are known for innovation, the application of science, and finding clever technical solutions, so we need young people to be aware of the great opportunities a career in horticulture will bring. Looking forward, our conversations around the food we produce need to include a wider audience. As we are seeing with our advocating for mandatory Country of Origin Labelling (CoOL) on fresh fruit and vegetables, when you engage the public you get a broader perspective and support in numbers. On behalf of the Board, I would like to acknowledge the work chief executive Mike Chapman has done in the past year in both structuring Horticulture New Zealand to meet the challenges ahead for growers, and in ensuring the organisation is financially robust. His team is focused on representing growers interests in the most effective and efficient way.
I would also like to acknowledge and thank the Horticulture New Zealand Board for showing vision and leadership in their governance. Director Mike Arnold left the Board during the year and was replaced by Hugh Ritchie, and we were joined by independent Director Bruce Wills. Welcome to Hugh and Bruce who have joined the Board at a dynamic time for horticulture. Julian Raine President, Horticulture New Zealand
Chief executive s report Mike Chapman United approach The three key activities areas identified in Horticulture New Zealand s refreshed strategic plan - enabling, promoting and advocating - are designed to deliver quality outcomes for growers by creating an enduring environment where they can prosper. Our focus is on issues where Horticulture New Zealand can make the most significant impact: resource management, our labour force, Government regulation, biosecurity, food assurance schemes and telling the horticulture story to politicians and the public. To achieve successful outcomes in all these areas Horticulture New Zealand partners with the product groups and district associations. Our united approach and recognition of who is best placed to lead each initiative creates the greatest impact. Aligned to these key activity areas are our two main campaigns: making country of origin labelling for fresh fruit and vegetables a legal requirement and convincing the Government to develop a food security policy to protect high value land for growing fruit and vegetables. We are focusing these campaigns on the general election on Saturday, 23 September 2017. A Consumer NZ survey, conducted in February 2017, told us that most consumers want to buy fresh and locally grown fruit and vegetables. Logically, we need to have high quality land to grow that produce or face the risk of needing to import, for example, leafy greens in spring. Around many of New Zealand s urban centres, but most critically our growing operations around Auckland, our high quality land is being turned into houses. Sure, people need somewhere to live, but what use is a house without infrastructure, or enough accessible food to feed the household? This is not a problem that can be effectively dealt with at a local council level. We believe central government needs to have a more big picture viewpoint and address the impacts of growing urban populations in a food security policy. We export more than 60% of what we grow, earning premium returns, with horticulture exports increasing in value by 40% over the two years from June 2014. To keep on making the significant returns to the New Zealand economy that come with such growth, we need high quality land preserved for horticulture. So the food security policy not only has application for domestic supply, but also for ongoing export growth. Over the reporting period, Horticulture New Zealand s financial position has improved, with expenditure being kept within budget and by levy income increasing due to growth in the value of key export crops. This has enabled Horticulture New Zealand s equity to be restored to acceptable levels to sustain operating expenses. The Board, assisted by our Auditors, is reviewing how much should be held to cover essential operating expenses should the industry, or part of it, face a crisis that could potentially reduce levy income. It is important for Horticulture New Zealand to have sufficient funds to be able to respond by assisting growers, while maintaining core operations and meeting our fixed commitments. Progressively, we have been aligning our staff structure to meet the requirements of the refreshed strategic plan along functional lines. The Board has agreed, due to the increase in biosecurity work as horticulture s partnership with the government develops, to add another staff member to our dedicated biosecurity team. We have also re-organised our natural resources team to increase the level of expertise and regional outreach. To enhance our ability to respond to government policy development and to be able to get in on the ground level of policy and rule development, a general policy position has been established. Our support and finance teams have been consolidated with a focus on strengthening our data bases, financial acumen and developing the ability to run surveys in-house. These changes
will progressively continue into the new financial year, enhancing our ability to deliver Horticulture New Zealand s strategic plan. Mike Chapman Chief executive, Horticulture New Zealand
Financial Statements 31st March 2017
Entity Information For the year ended 31 March 2017 Legal Name of Entity Incorporated Societies Number 1692422 Entity Type and Legal Basis Incorporated Society Entity's Purpose or Mission Working for Growers, Industry Wide, for Industry Good Entity Structure Incorporated Society Main Sources of Entity's Cash and Resources Revenue generated from levies. Main Methods Used by Entity to Raise Funds Funded through a commodity levy on the sale of fruit and vegetables. Physical Address Level 4, 20 Balance St, Wellington 6011 Postal Address PO Box 10232, Wellington, 6143 Page 2
Approval of Financial Report For the year ended 31 March 2017 The Directors are pleased to present the approved financial report including the historical financial statements of for year ended 31 March 2017 APPROVED HortNZ President Date 26th June 2017 HortNZ Vice-President Date 26th June 2017 Page 3
Statement of Revenue and Expense For the year ended 31 March 2017 Account Notes 2017 2016 Revenue Horticulture NZ - Core Activity 6,780,265 6,349,554 New Zealand GAP 647,727 550,883 Vegetables.co.nz 411,955 409,153 Vegetable Research & Innovation Board 399,383 280,699 Process Vegetables NZ 337,218 350,375 Tomatoes NZ 433,369 487,944 Vegetable NZ 1,222,012 1,194,321 Total Revenue 20 10,231,929 9,622,929 Expenses Horticulture NZ - Core Activity 5,538,002 6,190,298 New Zealand GAP 673,567 541,146 Vegetable Research & Innovation Board 343,939 325,684 Vegetables.co.nz 443,091 407,629 Process Vegetables NZ 363,406 334,562 Tomatoes NZ 419,596 393,255 Vegetable NZ 1,117,389 1,123,053 Total Expenses 20 8,898,990 9,315,627 Surplus/(Deficit) for the Year 1,332,939 307,302 Provision for Tax Provision for Tax - - Total Provision for Tax - - Surplus for Year After Tax 1,332,939 307,302 This statement is to be read in conjunction with the Notes to the Financial Statement. Page 4
Statement of Changes in Net Assets For the year ended 31 March 2017 Accumulated Funds 2017 Opening Balance Surplus/ (Deficit) Movements in Reserves Closing Balance Horticulture NZ 888,519 1,242,263 2,130,782 New Zealand GAP 429,281-25,840 403,441 Vegetable Research & Innovation Board 264,942 55,444 320,386 Vegetables.co.nz 451,929-31,136 17,391 438,184 Process Vegetables NZ 384,373-26,188 358,185 Tomatoes NZ 599,943 13,773 613,716 Vegetable NZ 885,561 104,623-17,391 972,793 Total Accumulated Funds 3,904,548 1,332,939 0 5,237,487 Accumulated Funds 2016 Opening Balance Surplus/ (Deficit) Movements in Reserves Closing Balance Horticulture NZ 704,267 159,256 24,996 888,519 New Zealand GAP 419,544 9,737 429,281 Vegetable Research & Innovation Board 251,001-44,985 58,926 264,942 Vegetables.co.nz 400,405 1,524 50,000 451,929 Process Vegetables NZ 412,955 15,813-44,395 384,373 Tomatoes NZ 564,781 94,689-59,527 599,943 Vegetable NZ 844,293 71,268-30,000 885,561 Total Accumulated Funds 3,597,246 307,302 0 3,904,548 This statement is to be read in conjunction with the Notes to the Financial Statement. Page 5
Statement of Financial Position As at 31 March 2017 Account Notes 2017 2016 Assets Current Assets Bank accounts and cash 6 1,594,972 1,053,997 Prepayments 409,020 57,019 Sundry Debtors 1,869,337 1,197,756 Investments 7 2,650,000 2,511,778 Provision for Tax 8 27,359 36,894 Total Current Assets 6,550,688 4,857,443 Non-Current Assets Fixed assets 9 148,498 175,625 Intangible Assets 10 71,737 29,724 Total Non-Current Assets 220,235 205,349 Total Assets 6,770,923 5,062,792 Liabilities Current Liabilities Creditors and accrued expenditure 11 1,171,427 901,377 Fit Out Incentive 29,480 29,480 Income in Advance 12 327,616 192,994 Total Current Liabilities 1,528,523 1,123,851 Non-Current Liabilities Fit Out Incentive 4,913 34,393 Total Non-Current Liabilities 4,913 34,393 Total Liabilities 1,533,436 1,158,244 Total Assets less Total Liabilities (Net Assets) 5,237,487 3,904,548 Accumulated Funds Accumulated surpluses and deficits 5,237,487 3,904,548 Total Accumulated Funds 5,237,487 3,904,548 HortNZ President HortNZ Vice-President 26th June 2017 26th June 2017 This statement is to be read in conjunction with the Notes to the Financial Statement. Page 6
Statement of Cash Flows For the year ended 31 March 2017 Notes 2017 Cash Flows From Operating Activities Cash was received from: Fees and other income 9,606,468 Interest 88,502 9,694,970 Cash was applied to: Payments to suppliers 8,904,018 Net Cash Flows from Operating Activities 790,952 Cash Flows From Investing Activities Cash was applied to: Fixed Asset Purchases 37,148 Intangible Purchases 74,607 Increase in Investments 138,222 Net Cash Flows from Investing Activities (249,977) Net Increase / (Decrease) in Cash 540,975 Opening Cash 1,053,997 Closing Cash 1,594,972 This is represented by: Bank & Cash 1,594,972 Note: On transition to Tier 2 PBE IPSAS the Society has the option to not present comparatives. The Society has elected to use this exemption in relation to the cashflow statement. Page 7
Notes to and Forming Part of the Financial Statements For the Year Ending 31 March 2017 1. Reporting Entity Horticulture New Zealand Inc ( the society ) is a society registered in New Zealand under the Incorporated Society Act 1908. The industry association represents New Zealand s 5500 commercial fruit and vegetable growers. The Society is funded by a commodity levy on the sale of commercially grown fruit and vegetables. The organisation is governed by a board of nine directors made up of two appointed independent directors and seven elected grower directors. The financial statements are for the society and its wholly owned subsidiary Horticulture New Zealand Limited. 2. Basis of Preparation (a) Statement of Compliance These financial statements have been prepared in accordance with Generally Accepted Accounting Practice (NZ GAAP). They comply with the Public Benefit Entity International Public Sector Accounting applying the Reduced Disclosure Regime ( PBE IPSAS RDR ), as appropriate for Tier 2 not-for-profit public benefit entities. The board considers the basis to be appropriate for the readers of financial statement and tabling with the government. The Society has complied with the PBE IPSAS RDR in all material respects. The Accounting Policies that have been applied in respect to the preparation of financial statements are set out below. The financial statements were authorised for issue in accordance with a resolution dated 26 June 2017. (b) Measurement Basis These financial statements have been prepared on a historical cost basis. The financial statements are presented in New Zealand dollars (NZ$) and all values are rounded to the nearest NZ$, except when otherwise indicated. 3. Significant Accounting Policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements and have been applied consistently by the Society, except as explained in Note 4, which addresses changes in accounting policies. Certain comparative amounts in the statement of comprehensive revenue and expense have been represented as a result in changes in accounting policies (Note 4) (a) Presentation of Statement of Revenue and Expense and Statement of Changes in Net Assets Both the statement of revenue and expenses and statement of changes in net assets are presented on a by function basis categorised by the Product Groups that exist within the Society. Transactions that occur between product groups are disclosed as transfers within the statement of changes in net assets. (b) Revenue Revenue is recognised to the extent that it is probable that the economic benefit will flow to Horticulture New Zealand and the revenue can be easily measured. Revenue is measured at fair value of consideration received. Page 8
Notes to and Forming Part of the Financial Statements For the Year Ending 31 March 2017 The following specfic revenue streams are recognised: (i)nz GAP fees Annual Fees for NZGAP is non-exchange revenue and accounted for on an accrual basis. (ii)levies Levies are non-exchange revenue and accounted for on an accrual basis when the growers' declaration is received. (iii)orchardist and Grower Subscriptions Subscription income is exchange revenue and recognised as earned by reference to actual subscription period, membership subscription received in relation to the following financial year is carried as a liability (income in advance). (iv)grant Income and Project Funding Grant and Project funding income is non-exchange revenue and recognised as revenue when associated obligations have been met. (v) Event income Income from events that Horticulture New Zealand has organised is exchange revenue and recognised once the event has occured. (vi)administration Recoveries Horticulture New Zealand provides administration services to the other product groups within Horticulture New Zealand. This is exchange revenue and invoiced on a monthly basis. (c) Finance Income and Finance Costs Interest income is exchange revenue and recognised using the effective interest rate method. (d) Financial Instruments Financial Instruments carried on the statement of financial position include cash and bank balances, receivables and payables. There are no off balance sheet financial instruments. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. (i)bank accounts Bank accounts and cash comprise cash balances and bank balances (including short term deposits) with original maturities of 90 days or less. (ii)investments Cash held on term deposits are "with high quality financial institution trading banks" and is repayable on demand. There are no other interest bearing assets or liabilities. (iii)accounts Receivable Accounts Receivable are stated at estimated realisable value after providing against debts where collection is doubtful. (iv)creditors and accrued expenditure Creditors and accrued expenditure includes amounts owing to suppliers and employees. Expenditure is accrued at the amount invoiced. Page 9
Notes to and Forming Part of the Financial Statements For the Year Ending 31 March 2017 (v)income Tax Income Tax is accounted for by the tax payable method. (vi)goods and Services Tax The statement of revenue and expense has been prepared so that all components are stated exclusive of GST. All items in the statement of financial position are stated net of GST, with the exception of receivables and payables, which include GST invoiced. (e) Property, Plant and Equipment The cost of purchased property, plant and equipment is the value of the consideration given to acquire the assets and to get them to the location and condition necessary for their intended service. (i)depreciation Depreciation is provided on Plant and Equipment. Depreciation is calculated on either a diminishing value or a straight line basis. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period. Office Equipment and Furniture 8.5% - 80% Straight Line or Diminishing Value Leasehold Improvements 12.5% Straight Line Intangible Assets 10.5% Straight Line (f) Leases Leases in terms of which the Society assumes substantially all the risks and rewards of ownership are classified as finance leases. Leases that are not finance leases are classified as operating leases. Operating leases are not recognised in the Societies statement of financial position. 4. Changes in Accounting Policies The Society transitioned on 1 April 2016 from the preparation of special-purpose financial accounts using the Special Purpose Framework for use by For-Profit Entities (SPFR for FPEs) published by the New Zealand Institute of Chartered Accountants to a general purpose financial reporting regime PBE IPSAS RDR as stated above. There have been changes in the recognition or measurement of any financial reporting areas as a result of the transition. There have been no other changes in accounting policies. 5. Allocation of Interest Interest income, less the associated provision for taxation is allocated to each product group within Horticulture New Zealand Inc, based on their average proprietorship over the 12 months to the reporting date. 2017 2016 6. Cash and Bank BNZ Direct Levy Account 92,679 76,826 BNZ Autocall Account 672,723 443,580 BNZ Current Account 829,351 533,468 Audit Bank Accounts 219 123 Total Cash and Bank 1,594,972 1,053,997 Page 10
Notes to and Forming Part of the Financial Statements For the Year Ending 31 March 2017 2017 2016 7. Investments Term Investment - ANZ Bank 750,000 750,000 Term Investment - ASB Bank 800,000 750,000 Term Investment - Kiwibank 500,000 500,000 Term Investment - Rabobank 600,000 511,778 Total Investments 2,650,000 2,511,778 Recognised as: Investments - Current 2,450,000 2,511,778 Investments - Non-Current 200,000 0 2,650,000 2,511,778 Interest earned in the year 3.35% - 3.65% (2016: 3.25% - 4.40%) 2017 2016 8. Income Tax Current Year Earnings 1,332,939 269,005 Tax at 28% 373,223 75,321 Adjustments Non Deductible Income -2,223,538-1,868,774 Non Deductible Expenditure 1,846,495 1,782,550 Total Adjustments -3,820-10,903 Use of losses brought forward 3,820 3,723 Tax expense for the period 0-7,180 Provisional Tax Paid - - RWT 25,359 36,894 Provision for Tax 2,000 - Tax (Payable)/Refund 27,359 36,894 2017 2016 9. Property, Plant and Equipment Office Equipment and Furniture Cost 319,059 281,910 Accumulated Depreciation -265,417-232,760 Total Office Equipment and Furniture 53,642 49,150 Leasehold Improvements Cost 252,950 252,950 Accumulated Depreciation -158,094-126,475 Total Leasehold Improvements 94,856 126,475 Total Property, Plant and Equipment 148,498 175,625 Page 11
Notes to and Forming Part of the Financial Statements For the Year Ending 31 March 2017 10. 2017 2016 Intangible Asset Software Cost 98,291 31,603 Accumulated Depreciation -35,381-3,770 Total Software 62,910 27,833 Intangible Asset Cost 9,826 1,907 Accumulated Depreciation -999-16 Total Intangible Asset 8,827 1,891 Total Intangible Assets 71,737 29,724 2017 2016 11. Creditors and Accrued Expenditure Trade Creditors 808,336 680,094 Accrued Expenditure 48,482 31,907 Employee Entitlements 94,692 103,846 GST 219,917 85,530 Total Creditors and Accrued Expenditure 1,171,427 901,377 12. Income in Advance This is comprised of amounts received for the Asia Fruit Logistica event, NZ GAP Income in Advance and projects where funding has been received in advance of the cost associated with it and there is an obligation to return unspent funds. 13. Commitments The following amount have been committed by Horticulture New Zealand Inc but not recognised in the financial statements. 2017 2016 Operating Leases Non cancellable operating lease commitments Within one year 228,560 233,160 Later than one year 34,215 262,775 Total Non cancellable operating lease commitments 262,775 495,935 Total Operating Leases 262,775 495,935 2017 2016 14. Professional Services Payments made to Auditors: Audit Fee 14,500 19,500 Special Purpose Financial reporting Transition/ Virtual CFO - 14,150 Total Payments made were: 14,500 33,650 Page 12
Notes to and Forming Part of the Financial Statements For the Year Ending 31 March 2017 15. Capital Commitments There are no capital commitments as at 31 March 2017. (2016: Nil) 16. Contingent Liabilities and Guarantees There are no contingent liabilities or guarantees as at 31 March 2017. (2016: Nil) 17. Property Securities Leasing Solutions Limited hold property securities over photocopiers. 18. Related Parties Horticulture New Zealand Limited is a wholly owned subsidiary company of Horticulture New Zealand Inc and was incorporated on 13 October 2004. Ownership is by way of 100% shareholding of 200 shares in Horticulture New Zealand Limited. These shares have no nominal value. The directors of Horticulture New Zealand Limited are also the President and Vice President of the Board of Horticulture New Zealand Inc. Directors of Horticulture New Zealand who are growers pay levies through the entities they are associated with. During the year, entities associated with Horticulture New Zealand directors also rented space for the Asia Logistica Trade show and sponsored both the conference and Young Grower of the Year event. One board member of Horticulture New Zealand Inc is a Trustee for the Fruitgrowers Charitable Trust. Management has not consolidated the subsidiary Horticulture New Zealand Limited, recognising the investment in this company as an investment at cost. The subsidiary company is not trading and has no significant assets or liabilities. Management believe any difference in treatment as a consolidation entity or as an investment at cost is not material. Page 13
Notes to and Forming Part of the Financial Statements As at 31 March 2017 19. Prior Period Adjustment In the 2016 Financial Statements the Revenue and Expenses for Vegetables NZ within Horticulture New Zealand were not included. This has now been corrected in the 2016 comparatives resulting in an increase in total surplus for Horticulture New Zealand for 2016 of $38,297. An ongoing project being managed by Horticulture New Zealand has been included in the Revenue and Expenses Statement in 2017 however it was included in the Statement of Financial Position in the 2016 Financial Statements. This has been corrected in the 2016 comparatives with no effect on the 2016 surplus. 2016 Signed Accounts 2016 Comparatives in 2017 Adjustments Revenue Horticulture NZ-Core Activity 6,267,600 81,954 6,349,554 Vegetables.co.nz 442,124-32,971 409,153 Vegetables NZ 0 1,194,321 1,194,321 Expense Horticulture NZ-Core Activity 6,083,344 106,954 6,190,298 Vegetables R & I 350,684-25,000 325,684 Vegetables NZ 0 1,123,053 1,123,053 Financial Position Prepayments 85,139-28,120 57,019 Creditors 971,959-70,582 901,377 Income in Advance 188,829 4,165 192,994 20. Statement of Financial Performance by Function Below is the Statement of Financial Position by Function which shows revenue, expenditure and surplus per the individual product group included in the financial statements. The surplus/(deficit) is shown in the Statement of Changes in Net Assets.
20. Statement of Financial Performance by Function HortNZ NZ Gap Vegetable R & I Vegetables.co.nz Process Vegetables Vegetables NZ Tomatoes NZ TOTALS Revenues Levies 4,480,512 261,462 1,201,756 419,596 6,363,326 Grant Income & Project Funding 222,179 73,324 66,367 361,870 Orchardist & Grower Subscriptions 826,078 826,078 Interest Income 19,326 9,935 5,793 10,030 9,389 20,256 13,773 88,502 NZ Gap Fees 637,792 637,792 Service Recoveries 671,041 671,041 Grower Support Income 252,500 252,500 Conference Income 253,572 253,572 Contribution Income 55,057 320,266 401,925 777,248 Total Revenues 6,780,265 647,727 399,383 411,955 337,218 1,222,012 433,369 10,231,929 Expenses Audit Fee 15,000 15,000 Administration Costs 844,366 61,959 17,063 43,474 42,519 1,009,381 Conference Expenses 224,750 803 4,395 21,526 251,474 Consultancy 469,407 273,268 76,590 819,265 Contract Services 1,117,389 419,596 1,536,985 Depreciation 96,869 96,869 Directors Fees 306,304 16,709 323,013 Employee Costs 1,415,097 210,755 25,520 49,254 1,700,626 Legal Fees 127,637 668 128,305 Orchardist & Grower Expenses 828,799 828,799 Projects 267,179 111,613 247,609 188,526 814,927 Promotion & Marketing 360,439 360,439 Rent Expenses 109,223 109,223 Service Expenses 671,041 671,041 Travel & Accommodation 162,331 15,972 1,874 9,263 44,204 233,644 Total Expenses 5,538,002 673,567 343,939 443,091 363,406 1,117,389 419,596 8,898,990 Surplus/Deficit for the Year 1,242,263-25,840 55,444-31,136-26,188 104,623 13,773 1,332,939
BDO WELLINGTON INDEPENDENT AUDITOR S REPORT TO THE MEMBERS OF HORTICULTURE NEW ZEALAND INCORPORATED Opinion We have audited the financial statements of ( the Society ), which comprise the statement of financial position as at 31 March 2017, and the statement of revenue and expense, statement of changes in net assets and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Society as at 31 March 2017, and its financial performance and its cash flows for the year then ended in accordance with Public Benefit Entity Standards Reduced Disclosure Regime ( PBE Standards RDR ) issued by the New Zealand Accounting Standards Board. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (New Zealand) ( ISAs (NZ) ). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Society in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other than in our capacity as auditor we have no relationship with, or interests in, the Society. Other Information The directors are responsible for the other information. The other information obtained at the date of this auditor s report is information contained in the annual report, but does not include the financial statements and our auditor s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Directors Responsibilities for the Financial Statements The directors are responsible on behalf of the Society for the preparation and fair presentation of the financial statements in accordance with PBE Standards RDR, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible on behalf of the Society for assessing the Society s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Society or to cease operations, or have no realistic alternative but to do so.
BDO WELLINGTON Auditor s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs (NZ), we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Society s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of the use of the going concern basis of accounting by the directors and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Society s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Society to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Other Legal and Regulatory Requirements Who we Report to This report is made solely to the Society s members, as a body. Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Society and the Society s members, as a body, for our audit work, for this report or for the opinions we have formed. BDO WELLINGTON 26 June 2017 Wellington New Zealand